Suntec REIT has announced the divestment of its 30.0% interest in 9 Penang Road to Haiyi Holdings at an agreed property value of SGD295.5 million.

The agreed property value represents a 5.7% premium over the latest valuation of SGD931.8 million and 30.3% higher than the total development cost of SGD756.0 million.

9 Penang Road is a ten-storey Grade A office property that completed its redevelopment works in 2019.

The redevelopment was carried out by Suntec REIT, Haiyi Holdings, and SingHaiyi Group Ltd.

The asset consists of two office towers and ancillary retail with a net lettable area of approximately 399,000 square feet.

The committed occupancy was 98.7% as at 31 March 2021 with the two office towers fully leased to a global financial institution, UBS AG.

On a stabilised basis, the net property income yield is 3.3%.

“The divestment of 9 Penang Road is part of our proactive portfolio management strategy to enhance unitholders’ value”, said Chong Kee Hiong, CEO of Suntec REIT’s manager.

“We are pleased to have realised a gain on divestment of SGD66.5 million and achieved a 305% return on our investment”, he added.

“The divestment proceeds will improve our financial flexibility to pursue growth opportunities to further enhance the resilience, diversification and value of Suntec REIT’s portfolio for unitholders”.

Post divestment, Suntec REIT continues to be anchored by the office segment which will contribute more than 80% to the REIT’s total income contribution with Singapore properties constituting about 75% of our total assets under management.

Suntec REIT was last done on the Singapore Exchange at SGD1.48, which implies a distribution yield of 5.55% according to data compiled on the Singapore REITs table.